Page last updated at 10:17 GMT, Wednesday, 4 February 2009

Canada MPs approve stimulus plan

Canadian PM Stephen harper annoucning help for the carindustry in December
PM Stephen Harper's Conservatives were re-elected last October

Canadian MPs have approved the federal budget, ensuring the survival of the minority Conservative government.

The budget includes a C$40bn ($32bn,23bn) stimulus package to try to boost the economy during the global crisis.

The main opposition Liberals supported the measures after the government agreed to give regular updates on how they were being implemented.

A defeat would have toppled the government, possibly leading to new elections or some kind of coalition.

Arguments over a budget presented last year escalated into a full-blown political crisis.

In December, opposition parties accused Prime Minister Stephen Harper's Conservatives of doing too little to tackle Canada's economic problems and threatened to bring down the government in a confidence vote.

This scenario was only avoided when the Governor General, Michaelle Jean, suspended parliament at Mr Harper's request for six weeks until 26 January to give the government time to redefine the budget.


The budget, which was unveiled last week, was backed by 211 votes to 91. Most of the opposition Liberals joined the Conservatives to back the measures, while the New Democratic Party (NDP), Bloc Quebecois and a handful of Liberal MPs voted against.

Liberal leader Michael Ignatieff had indicated that his party would support the budget, aware that the Liberals are not ready to fight an election most Canadians do not want, correspondents say.

The latest plan forecasts a federal deficit of C$85bn over the next five years - the first time in 11 years that Canada will run a deficit.

The government says the stimulus measures will boost the economy by 1.4% this year and create 190,000 jobs by 2011.

The credit crunch and falling commodity prices have started to hit Canada, which lost more than 100,000 jobs in the last two months of 2008.

Among the key elements of the budget are:

  • Tax cuts for lower and middle-income earners worth C$20bn
  • C$12bn in infrastructure spending including roads, bridges and clean energy programmes over two years
  • C$1.9bn in tax measures for businesses
  • Targeted loans and worker training programmes

Depite the Liberals' support for the budget, Mr Ignatieff allowed several Liberal MPs from Newfoundland and Labrador to break ranks and vote against it.

They were angry at cuts in federal funding for their province.

Mr Ignatieff said he was allowing a "one-time protest vote" to show displeasure at the way Mr Harper was running the country.

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